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Thiel’s Founders Fund Doubles Down on Crypto with $200 Million Bet During Downturn

Last Updated February 13, 2024 3:33 PM
Teuta Franjkovic
Last Updated February 13, 2024 3:33 PM

Key Takeaways

  • Founders Fund’s bet on crypto signals renewed institutional confidence.
  • Thiel’s influence may draw other investors back.
  • Founders Fund’s ‘buy the dip’ strategy showcases the potential rewards of bold moves.

Founders Fund, the venture capital firm established by billionaire Peter Thiel, is making investments in Bitcoin and ether again, according to sources .

This move indicates a revived interest in the cryptocurrency markets from Silicon Valley.

Founders Fund Dives Back into Crypto with $200M Investment

The firm allocated $200 million  for the purchase of crypto tokens between late summer and early fall of the previous year, evenly splitting this investment between bitcoin and ether, the two leading cryptocurrencies.

According to the report , Founders Fund, the venture capital firm founded by Peter Thiel, has renewed its investment in the cryptocurrency market, allocating $100 million each to Bitcoin and Ether during the late summer to early fall of 2023. At the time of these purchases, the price of Bitcoin was below $30,000.

Historically, Founders Fund initiated its Bitcoin investments in 2014, achieving a remarkable $1.8 billion profit by selling  its holdings before the market downturn in 2022.

Peter Thiel himself has been an outspoken supporter of Bitcoin for many years. Reflecting on the cryptocurrency’s surge in 2021, Thiel expressed regret in a Bloomberg report , suggesting he hadn’t invested as much in Bitcoin as he wished he had.

“You’re supposed to just buy Bitcoin. I feel like I’ve been underinvested in it,” he then said.

Founders Fund did not immediately respond to a request for comment.

Reentering Crypto Investment Scene Amid Market Recovery

A previously undisclosed initiative by the influential Silicon Valley venture capital firm, Founders Fund, highlights a resurgence of interest from some institutional investors in cryptocurrency tokens, a sector that was once the pinnacle of investment strategies before the tumultuous crash in 2022.

This significant investment move signals a possible revitalization of interest in crypto markets, which faced challenges in 2022 following the downfall of major entities like the FTX exchange, leading to plummeting prices, industry disrepute, and heightened regulatory scrutiny. During this period, Bitcoin’s value nosedived to around $15,000, marking its lowest level since 2020.

Bitcoin Surges to $50,000 Amidst $2.8 Billion ETF Inflows

As an early backer of SpaceX and Meta , Founders Fund oversees over $12 billion in assets under management as of 2023. The firm has extended its support to various crypto startups, such as Layer N, Ondo Finance, Block Green, among others.

On February 12, Bitcoin’s price broke through the $50,000 barrier , a level last seen in December 2021, underscoring a significant recovery. The role of Bitcoin ETFs has been particularly noted for their contribution to the cryptocurrency’s recent price increases.

In the early days of February, Spot Bitcoin ETFs saw more than $1.1 billion pouring in, while the pace of outflows from the Grayscale Bitcoin Trust began to decelerate. A report from CoinShares  dated February 12 revealed that since their launch on January 11, Bitcoin ETFs have garnered $2.8 billion in capital inflows, highlighting the growing investor interest in cryptocurrency through traditional financial instruments.

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